Addressing a press conference here, he said the new scheme would provide loans at three per cent interest rate to the weavers as against 11 per cent interest rate until last year. With this, the state exchequer would have to bear a burden of Rs 10 crore. Announcing that the government would implement th cluster scheme across the state, covering 27 handloom clusters, he said the new scheme would cover modernisation of handlooms, construction of common worksheds and training to improve the weavers' skills.

The government would sanction 10 per cent subsidy on purchase of yarn, dyes and chemicals to the handloom weavers from this year, Dr Reddy said, adding Rs 7.5 crore was allocated for the purpose.

Stating that the government would give 90 per cent subsidy towards beneficiary contribution under health insurance scheme, he said the total premium of the scheme was Rs 781. The beneficiary should pay only Rs 50 as his contribution.

The Chief Minister said the government would also introduce 'Aam Aadmi Bima Yojana' for the landless agricultural labourers from April one, 2008. The government would pay Rs 38 crore as premium during this year. About 38 lakh labourers would be covered under the scheme in the state.